Tribunal held that  as regards the addition made by the Assessing Officer on account of disallowance of certain expenses since this issue had been set aside by the Tribunal to the record of the Assessing Officer, the addition itself was no more in existence and consequently the penalty levied under section 271(1)(c) in respect of such addition would not survive. Tribunal held that  the show-cause notice itself suffered from illegality of not specifying the default or charges for which the penalty proceedings were proposed to be initiated by the Assessing Officer. Even in the penalty order, the Assessing Officer had levied the penalty in respect of the amount surrendered by the assessee as well as the additions made by him in the assessment proceedings. Even in the concluding part the Assessing Officer was not sure about the charge and default of the assessee for which the penalty was levied under section 271(1)(c) . The Assessing Officer had failed on both the counts as neither at the time of initiation of penalty proceedings nor at the time of passing the penalty order has specified the charge. Tribunal also held that

Explanation 5A to section 271(1)(c) was a deeming fiction which could not be extended beyond the scope of the provision. Only when the conditions prescribed under Explanation 5A and particularly the income representing money, bullion, jewellery or other valuable article or thing or income based on any entry in any books of account or other record was found, would Explanation 5A be attracted and the assessee could not escape from the mischief of the penalty provision under section 271(1)(c) merely because the income was declared in the return filed after search. The Assessing Officer had even not made any reference to any incriminating material so as to bring the income declared by the assessee in the return filed in response to the notice under section 153A within the ambit of Explanation 5A to section 271(1)(c) . Accordingly, Explanation 5A to section 271(1)(c) would not be applied in the case of the assessee.( AY.2010-11, 2011-12, 2012-13)